CMS officials have included a 2.26% risk score “normalization” factor in their advance notice for the Medicare Advantage program bidding process for 2019.
CMS officials say they think the “effective growth rate,” or increase in the underlying cost of care, will rise to 4.35% for 2019, from the growth rate of 2.8% assumed for the purposes of the bidding process for 2018.
But the addition of the risk score normalization factor could reduce the “expected average change in revenue” to 1.84%, from 2.75% for 2018.
CMS could end up facing pressure from health insurers to reduce or eliminate the normalization factor.
Medicare Advantage Basics
The oldest Medicare program, Medicare Part A, pays enrollees’ hospital bills. The next oldest program, Medicare Part B, pays for doctors and outpatient services.
The Medicare Advantage program, which is the biggest Medicare Part C program, gives private insurers a chance to offer Medicare enrollees an alternative to what CMS calls “Original Medicare,” or traditional Medicare program coverage.
The typical Medicare Advantage plan uses a managed care network to help hold down the cost of care. In return, the plan may offer lower premiums, lower out-of-pocket costs and more benefits than enrollees get through Original Medicare.
Medicare Advantage Risk Scores
CMS uses a risk-adjustment program to try to even out the overall level of enrollee health risk each Medicare Advantage plan issuer assumes. CMS bases the payment adjustments for the program on risk scores based on various factors that might make an enrollee more or less healthy.
CMS believes that, because the Medicare Advantage plan issuer want to optimize risk-adjustment results, they are working harder to put risk-related information in patients’ records.